Mumbai: Indian equity markets rallied sharply on Thursday, October 29, supported by positive global cues, renewed foreign investor buying and hopes of tax relief.
The BSE Sensex surged over 645 points, while the NSE Nifty 50 climbed more than 171 points, approaching the 22,900 mark.
At 1:36 pm IST, the Sensex was trading at 73,891.49, up 645.46 points or 0.88 percent. The Nifty 50 stood at 22,870.60, gaining 171.75 points or 0.76 percent.
The rally reportedly added nearly Rs 3 lakh crore to investors' wealth, taking the total market capitalisation of BSE-listed companies above Rs 475 lakh crore.
Six Key Factors Behind Today's Rally-
Fed Decision
The US Federal Reserve kept its benchmark interest rate unchanged at around 3.9 percent, offering some relief to global equity markets.
The decision followed a quarter-point rate hike last month. However, investors remain cautious as another increase could come in December amid persistent inflation concerns.
Tax Relief
Expectations of possible changes to India's long-term capital gains (LTCG) tax and securities transaction tax (STT) have strengthened market sentiment.
Finance Minister Nirmala Sitharaman recently indicated that discussions on these taxes were continuing.
Brokerage Jefferies believes potential LTCG tax relief could encourage foreign investors to return to Indian equities.
Foreign Buying
Foreign institutional investors (FIIs) purchased Indian equities worth approximately Rs 872 crore on Wednesday, according to provisional NSE data.
This followed purchases of Rs 4,198 crore on Tuesday and Rs 2,098 crore on Friday.
However, analysts believe sustained buying is necessary before confirming a reversal in foreign investment trends.
Rupee Recovery
The Indian rupee strengthened by 11 paise to 95.17 against the US dollar, supported by a softer greenback.
The currency opened at 95.20 before recovering further.
A stronger rupee can improve foreign investor sentiment, although elevated crude oil prices remain a concern.
Lower Yields
US Treasury yields eased following the Federal Reserve's announcement.
The benchmark 10-year Treasury yield slipped below 5 percent, while the two-year yield declined to 4.69 percent.
Lower bond yields can make equities relatively more attractive, supporting investment flows into stock markets.
Attractive Valuations
Following the recent market correction, analysts see buying opportunities in several sectors.
Kotak Institutional Equities noted that valuations have become more reasonable across stocks and sectors, creating opportunities for selective investments.
Which Stocks Gained?
Adani Ports led the Sensex gainers, rising more than 4 percent.
Power Grid, Kotak Mahindra Bank, Hindustan Unilever, NTPC, ITC, Reliance Industries, Titan, TCS and Infosys also witnessed buying interest.
The Nifty FMCG index gained around 2 percent, while banking and IT stocks supported the broader rally.
Why Caution Remains
Despite Thursday's gains, analysts remain cautious about elevated crude prices, persistent foreign capital outflows and possible US interest rate hikes.
Geojit Investments' V K Vijayakumar warned that rising oil prices and continued foreign investor preference for AI-related markets could create further challenges for Indian equities.
Expiry-related volatility could also influence trading during the remaining session.
Disclaimer: This article is for informational purposes only. Stock market investments involve risks. Consult a financial adviser before making decisions.
